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Online photo service Shutterfly posts a 16% increase in Q2 sales

August 24, 2015 02:48 PM

Shutterfly Inc., an online provider of photographic product and services to businesses and consumers, posted a 15.5% increase in revenue for the second quarter, to $183.88 million from $159.15 million a year earlier. Although most of its sales are to consumers, its sharpest revenue growth continues to be in business-to-business sales.

Shutterfly sells marketing materials to businesses as well as photography products and services to consumers through Shutterfly.com and other sites including ThisLife.com, WeddingPaperDivas.com, TinyPrints.com. It also operates a photography equipment rental site at BorrowLenses.com. About 93% of its sales are to consumers, but a stepped-up focus on business customers in recent years has resulted in sharp increases in B2B revenue—what the company refers as “enterprise revenue”—generated by Shutterfly Business Solutions.

The company posted $12.61 million in enterprise revenue for the quarter, up 40.1% from $9.00 million a year earlier. It posted consumer sales of $171.27 million, up 14.1% from $150.15 million

In the company’s second-quarter earnings call with stock analysts, CEO Jeffrey Housenbold cited as an example of Shutterfly’s momentum in B2B sales a “multi-year, nine-figure” contract signed in the quarter with a Fortune 50 company. He declined to name the client, but said it had responded to Shutterfly’s increased investment in technology and services designed to help companies more efficiently produce marketing materials and to use web analytics to evaluate the impact of those marketing materials.

“We are very excited about this,” Housenbold said in the earnings call, according to a transcript from Seeking Alpha. “This is proof that the investments we are making in the enterprise technology platform are the right ones that will allow us to broaden our set of services that we are offering Fortune 1000 companies to manage their marketing collateral more efficiently.”

Shutterfly’s B2B sales are comprised primarily of four-color marketing materials ordered online and manufactured for business clients, including such companies as satellite TV provider DirecTV and hotel chains Starwood Hotels and Best Western International Inc. Shutterfly produces customized photo-enhanced marketing materials and offers a multichannel marketing platform that enables clients to manage coordinated campaigns through one or more channels including web ads, mobile text messaging, and targeted e-mail that uses a personalized web address that can include a customer’s name in the e-mail’s URL.

Shutterfly Business Solutions also provides data-management services that help business clients segment and analyze data on their targeted customers’ past buying patterns, responses to marketing campaigns and other information to manage marketing campaigns. “The same attention to detail that has made Shutterfly the choice of millions of customers is what your business will receive with SBS,” Shutterfly says.

Shutterfly also reported for the second quarter ended June 30:

● Gross profit of $87.23 million, up 15.1% from $75.81 million a year earlier;

● A net loss of $23.78 million, narrowed from $27.05 million.

For the six months ended June 30, it reported:

● Net revenue of $343.86 million, up 16.1% from $296.25 million a year earlier;

● Consumer revenue of $320.06 million, up 14.0% from $280.77 million a year earlier;

● Enterprise revenue of $23.80 million, up 53.8% from $15.47 million;

● Gross profit of $152.50 million, up 11.7% from $136.57 million.

Shutterfly is No. 50 in the Internet Retailer 2015 Top 500 Guide, which ranks companies on their annual web sales.

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